Car Leasing Myth Busters #7: Can I Lease a Vehicle For My New Business?
Most businesses need vehicles on the road to operate. Whether it be cars, vans or a mixed fleet, they are an essential part for many business owners. With leasing now being one of the most popular methods of acquiring vehicles for businesses, it is understandable that a lot of new businesses want to start of by leasing vehicles.
Unfortunately, this is not a straight forward thing to do. In a nutshell, the large majority of finance lenders/funders for leasing require a business to have been trading for a minimum period of 2 years and have one set of full accounts filed with Companies House. This is to allow them to carry out a proper risk assessment to determine credit worthiness. Underwriters are unable to assess a business without this information as they have no financials to base a decision off of.
The Limited Exception
There are some limited exceptions to this. The exceptions are there to allow consideration to be given to a new business' credit application and do not guarantee a credit approval. One example of an exception is when a business was formally a sole trader that has now become a limited company. Additional financial information can be provided to demonstrate the sole trader's performance prior to becoming a limited company to support the application.
What Options Are Available?
There are still some options available to you if you are new start up business looking for a vehicle.
- Outright Purchase - this is where you buy the vehicle outright. It does require a large amount of capital upfront so may not be suitable to everyone. A bank loan is a common method used by businesses to purchase a vehicle out right.
- Leasing Companies specialising in new start ups - these do exist as some leasing companies work with lenders that will underwrite for new start ups. As a new business carries an element of unknown risk, they may charge more per month or ask for a larger initial payment, or a combination of the two.
- Other finance options - you may be able to Hire Purchase or fund the vehicle through other finance methods.
If you have any questions or would like to know more about leasing for your business, speak to a member of our friendly team today! You can call us on 01277 549500 or email sales@pendlelease.co.uk
